| The rise of application service providers (ASPs) will have a profound effect on network service providers, software vendors, and integrators alike. Some CLECs and other carriers have already formed ASP divisions or alliances. What is the right path for a CLEC that wants to capitalize on the ASP movement and how important is it to a business strategy? At the root of the answer lies the impact ASPs will have on small to medium-sized businesses (SMBs). This group of end-users in particular will benefit from outsourced software delivery and management, and the demand for more sophisticated applications will only increase as e-business and lower cost bandwidth cascade down to every level of the economy.
An ASP move may not be right for every CLEC. Certainly, facilities-based CLECs with strong data, Internet, and operational support systems (OSS) capability will have an advantage. New technologies will also contribute to the success of ASPs and CLEC participants. The deployment of softswitches, for example, is spurring the consolidation of voice and data traffic and reducing the cost of transmission. These developments change the landscape considerably for CLECs. Looking down the road, might not bandwidth become a commodity? Will long distance become extinct? Carriers must look for high-quality revenue sources for the future, and an ASP play might be the answer for some. CLECs might consider becoming wholesalers of ASP services to other CLECs and to ISPs; courting ASPs as customers for bandwidth; or forming alliances with ASPs to deliver value-added services for SMB end users. Although the use of terms such as "cyber carrier" (carriers wholesaling bandwidth and managing data centers for ASPs), "telephony ASPs," and "communications ASPs," (carriers that provide voice as an application) are proliferating, they do not exhaust the ways a CLEC can capitalize on the ASP movement.
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